UK retail sales show strongest quarter of growth in two years

Consumer sentiment in Britain has remained firm since the nation voted in June to leave the European Union, although demand for clothing and footwear in the third quarter was dented by higher prices and unusually warm weather.
Consumer sentiment in Britain has remained firm since the nation voted in June to leave the European Union, although demand for clothing and footwear in the third quarter was dented by higher prices and unusually warm weather.PHOTO: AGENCE FRANCE-PRESSE

LONDON • British retail sales recorded their strongest quarter of growth since late 2014 in the three months to Sept 30, but warm weather and higher prices dented demand for new clothing towards the end of the period.

Britain's statistics agency said yesterday that consumer sentiment had remained firm since the nation voted in June to leave the European Union, and that the sector would make a robust contribution to economic growth during the third quarter. "The underlying trend is one of strength, suggesting consumer confidence has remained steady since June's referendum," said statistician Kate Davies of the Office for National Statistics (ONS).

In the three months to Sept 30, retail sales volumes grew by 1.8 per cent, the fastest rate since the fourth quarter of 2014 and up from 1.1 per cent in the three months to June 30.

Compared with a year earlier, third-quarter sales were 5.4 per cent higher, again the strongest calendar quarter since the fourth quarter of 2014.

But there was zero growth last month, missing the forecasts of economists in a Reuters poll for a 0.4 per cent rise. The ONS said the biggest monthly falls in sales were for clothing and footwear, which had also dropped sharply in August.

Higher prices and unusually warm September weather, which dented the demand for new autumn ranges, were behind the fall, the agency said.

Figures released on Tuesday showed the biggest monthly jump in clothing prices in several years last month, and data on store sales showed the smallest drop in store prices in just over two years.

Economists are concerned that this marks the start of a longer-term trend of rising prices that will eat into consumer demand, with sterling having fallen more than 15 per cent since the referendum.

A survey of households on Wednesday showed the greatest concern about price rises in nearly two years, and official data on Tuesday showed the biggest monthly increase in inflation since June 2014.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 21, 2016, with the headline 'UK retail sales show strongest quarter of growth in two years'. Print Edition | Subscribe